Government closes mortgage scams tied to Google

The federal government has shut down dozens of Internet scam artists who had been paying Google (GOOG) to run ads making bogus promises to help desperate homeowners scrambling to avoid foreclosures.

The crackdown announced Wednesday renews questions about the role that Google's massive advertising network plays in enabling online misconduct. It may also increase the pressure on the company to be more vigilant about screening the marketing pitches that appear alongside its Internet search results and other Web content.

The criminal investigation into alleged mortgage swindlers comes three months after Google agreed to pay $500 million to avoid prosecution in Rhode Island for profiting from online ads from Canadian pharmacies that illegally sold drugs in the U.S.

A spokesman for the U.S. Treasury Department division overseeing the probe into online mortgage scams declined to comment on its scope other than to say it's still ongoing.

Google also declined to comment Wednesday.

No company wants to be tainted by a criminal investigation, but the prospect is even more nettlesome for Google because it has embraced "don't be evil" as its corporate motto.

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That commitment may make it difficult for Google to fend off a call by Consumer Watchdog to donate the revenue from fraudulent mortgage ads to legitimate organizations that help people ease their credit problems. Consumer Watchdog is an activist group that released a report in February asserting that Google was profiting from ads bought by mortgage swindlers.

"Google should never have published these ads, but its executives turned a blind eye to these fraudsters for far too long because of the substantial revenue such advertising generates," said Consumer Watchdog's John Simpson, a frequent critic of the company.

To fight future abuse, Google has suspended its business ties with more than 500 advertisers and agencies connected to the alleged scams, according to the Treasury Department's Office of the Special Inspector General for the Troubled Asset Relief Program.

The evidence collected in the current investigation led to the government's closure of 85 alleged mortgage scams. The identities of the businesses and people involved weren't disclosed Wednesday.

The companies are accused of duping people into believing they could help lower their home loan payments under government-backed mortgage modification programs. The alleged rip-offs typically relied on collecting upfront fees or getting victims to transfer their monthly mortgage payments to the scam artists, according to the Office of the Special Inspector General for the Troubled Asset Relief Program.